Page 222 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes Generally, lead-time reductions enhance value. This is especially true when the organization can
be counted on to perform as promised. Hence managers strive to reduce both the duration and
the variability of lead-times.

Whether the customer, the seller, or the maker of the product bears the burden of lead-time
depends on the market orientation a firm uses to supply a product. The ability to deliver a

product faster than the competitors can give a firm a competitive advantage.
In manufactured goods, there is a relationship between volume and process decisions for service
operations. The key differences between typical manufacturing and service operations are
customer contact and capital intensity.
Many low contact systems, such as cheque processing at a bank, can be treated as quasi-
manufacturing systems, since most of the principles and concepts used in manufacturing apply
to these. Figure 7.5 shows this relationship and relates it to the capital intensity and automation
in the process.

Figure 7.5: Service Processes

Let us look at an example in greater detail. Postal services operations start with the collection
process. They employ postmen who pick up documents from the different letter-boxes. Some

customers give their packages at the counter of the post offices.
The particulars are entered in the computer at the collection centers. The consignments are then
sorted, put in separate bags with coded prefixed labels and sent to railway stations or airports at

the gateways where they are further sorted in accordance to their destinations.
Based on the codes the consignment reaches its destination, where it is sorted again on the basis
of the post office it falls under.

Postmen are then assigned delivery of the letters or documents.
This is a high volume, repetitive operation, with limited customer contact and therefore is

becoming more and more capital intensive as modernization of post offices continues to take
place in the country.
Processes must be designed around the service strategies selected for them. Thus, the manager
must give particular attention to these strategies when designing a service process.
High volumes at a service process typically mean the followi ng:
1. Process: The product or the customer moves through a series of standardized steps, such as

in line flows or assembly lines. The basic service and service specifications are standardized

and tightly controlled. Such services increase volumes and process replicability. An

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